James Cropper (AIM:CRPR) on Wednesday reported group revenue of £61.2m for the six months to 26 September, up 18.3% from £51.8m a year earlier, as the London-listed Advanced Materials and Paper & Packaging group reinstated its dividend with an interim payment of 5.0p per share.
Earnings (adjusted EBITDA) nearly doubled to £7.8m from £4.1m, up 90.2%, while adjusted profit before tax rose to £5.8m from £2.1m. Statutory profit before tax increased to £5m from £2.7m, after exceptional costs of £0.4m tied to restructuring and project costs, against a net exceptional gain of £1m in the prior-year period that included £1.5m from the disposal of non-core intellectual property rights. Basic earnings per share climbed to 39.8p from 21.6p.
The Paper & Packaging division, which returned to EBITDA profitability in the second half of the last financial year following restructuring and a shift to a five-day manufacturing pattern, drove the improvement: revenue rose 28.7% to £42.2m from £32.8m, lifting adjusted EBITDA to a £3.9m profit from a £0.7m loss a year earlier. The company attributed the growth to strong demand in added-value segments, helped by seasonal factors and a one-off inventory build by a major customer extending its distribution channels, alongside benefits from the operational improvement programme begun in the last financial year.
Advanced Materials revenue held flat at £19m, slightly ahead of the Board's expectations, as growth in established markets including aerospace, defence, construction and medical offset an anticipated decline in hydrogen coatings against a strong comparator. Adjusted EBITDA in the division fell to £5.1m from £5.5m, a drop the company attributed to product mix and a small currency-related gain recorded in the prior period.
Net debt fell to £2.7m at the period end, down from £10.5m a year earlier and down £5.4m from £8.1m at the last financial year-end, cutting the net debt to adjusted EBITDA ratio to 0.2x from 1.3x. The company said the period-end figure benefited from the balance date falling four days before the calendar month-end, with normalised net debt at £5.5m, or 0.4x adjusted EBITDA, once the timing effect is adjusted for. A new invoice discounting facility, introduced on 1 July, cut gross debt by £8.5m during the period to £12.6m.
"We are delighted to report an excellent set of interim results as we continue to see the benefit of disciplined execution of our strategic plan," said David Stirling, chief executive officer. "Profit recovery in the Paper & Packaging business is running well ahead of plan. In Advanced Materials, strength in established markets has offset lower revenue as expected in Hydrogen Coatings."
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The Board said strong trading and the strengthened balance sheet had enabled it to reinstate dividend payments, following a temporary hold imposed during the last financial year when no final dividend was recommended. It intends to pursue a progressive dividend policy while maintaining balance sheet strength and funding investment needs.
Trading since the period end has remained strong and in line with the Board's expectations, the company said.
It expects full-year group revenue to show mid-single-digit growth over the last financial year, and reiterated guidance given on 20 October for full-year adjusted EBITDA of £10.3m to £11.3m, which it said is 10-20% higher than market guidance prior to that date and approximately 15-25% above last year's level.
Paper & Packaging trading in the remainder of the financial year is expected to return to more normal seasonally adjusted levels, delivering high-single-digit full-year revenue growth and a mid-single-digit adjusted EBITDA margin, the company said.
Advanced Materials revenue and adjusted EBITDA in the second half are expected to be similar to the first half.
Year-end net debt is expected to be above the first-half level but remain below last year's year-end figure, reflecting the timing of capital expenditure, spending on a group-wide ERP upgrade, corporation tax payments and the second-half interim dividend payment.